Version General Certificate of Education (A-level) June 2011 Business Studies BUSS2 (Specification 2130) Unit 2: Managing a Business. Mark Scheme
Mark schemes are prepared by the Principal Examiner and considered, together with the relevant questions, by a panel of subject teachers. This mark scheme includes any amendments made at the standardisation events which all examiners participate in and is the scheme which was used by them in this examination. The standardisation process ensures that the mark scheme covers the candidates responses to questions and that every examiner understands and applies it in the same crect way. As preparation f standardisation each examiner analyses a number of candidates scripts: alternative answers not already covered by the mark scheme are discussed and legislated f. If, after the standardisation process, examiners encounter unusual answers which have not been raised they are required to refer these to the Principal Examiner. It must be stressed that a mark scheme is a wking document, in many cases further developed and expanded on the basis of candidates reactions to a particular paper. Assumptions about future mark schemes on the basis of one year s document should be avoided; whilst the guiding principles of assessment remain constant, details will change, depending on the content of a particular examination paper. Further copies of this Mark Scheme are available from: aqa.g.uk Copyright 2011 AQA and its licenss. All rights reserved. Copyright AQA retains the copyright on all its publications. However, registered centres f AQA are permitted to copy material from this booklet f their own internal use, with the following imptant exception: AQA cannot give permission to centres to photocopy any material that is acknowledged to a third party even f internal use within the centre. Set and published by the Assessment and Qualifications Alliance. The Assessment and Qualifications Alliance (AQA) is a company limited by guarantee registered in England and Wales (company number 3644723) and a registered charity (registered charity number 1073334). Registered address: AQA, Devas Street, Manchester M15 6EX.
Assessment Objectives The Assessment Objectives represent those qualities which can be demonstrated in candidates wk and which can be measured f the purposes of assessment. AO1 Demonstrate knowledge and understanding of the specified content AO2 Apply knowledge and understanding to problems and issues arising from both familiar and unfamiliar situations AO3 Analyse problems, issues and situations AO4 Evaluate, distinguish between and assess appropriateness of fact and opinion, and judge infmation from a variety of sources Quality of Written Communication Candidates give accurate definitions of relevant terms. Candidates can also gain credit f identifying a point relevant to the question. Candidates should apply their knowledge to the business context in which the question is set, through recognition of some specific business aspect, the management of the business the problems issues faced by the business. Candidates will not be rewarded f simply dropping the company name product categy into their answer. Candidates use relevant business they and select infmation from a range of sources, using appropriate methods, to analyse business problems and situations. F example, candidates may be asked to build up an argument that shows understanding of cause and effect. Candidates evaluate evidence to reach reasoned judgements. This can be shown within an answer, through the weighting of an argument It can also be shown within a conclusion, perhaps by weighing up the strength of the candidate s own arguments f and against a proposition. Candidates will not gain credit by the simple use of drilled phrases such as On the other hand Business operates in an everchanging environment. The quality of written communication is assessed in all assessment units where candidates are required to produce extended written material. Candidates will be assessed accding to their ability to: ensure that text is legible, and that spelling, grammar and punctuation are accurate, so that meaning is clear. select and use a fm and style of writing appropriate to purpose and complex subject matter ganise infmation clearly and coherently, using specialist vocabulary when appropriate The assessment of the quality of written communication is included in Assessment Objective 4. 3
ADDITIONAL GUIDANCE FOR MARKING SCHEME This marking scheme requires decisions to be made on whether candidates responses represent reasonable good application and reasonable good analysis. If a response demonstrates good analysis and application, award Level 5 full marks. Alternatively, if a response does not contain any relevant knowledge then a mark of zero would be appropriate. In making a decision about whether a particular response is good reasonable, use the following guidelines. APPLICATION Good application can be demonstrated in three ways. By combining data. F example, in responding to question 2(a), a candidate might achieve good marks f application by combining the notions that 60% of sales are to existing customers and the company relies on wd-of-mouth advertising as part of an argument explaining the imptance of quality to this company. By manipulating data. F example, when answering question 1(d), candidates might use the data in Figure 1 to calculate that Divine Chocolate holds 0.34% of the UK market f chocolate. When used as part of a relevant argument, this can receive appropriate marks f good application. By being consistently in context. An answer may not demonstrate either of the above characteristics, but it may be in context throughout with each argument related to the scenario. If a candidate makes a single simple reference to the context when developing an argument, this is reasonable application. An example of this in answering question 1(b) could be that the company pays a 10% fair trade premium when buying its supplies of cocoa beans. F application to be creditwthy, it must be used as part of a relevant argument. Some candidates simply copy out part of the case. This should not receive credit. ANALYSIS Good analysis is shown when a candidate develops a chain of argument with a clear focus on the question. F example, when responding to question 2(d), a line of argument which puts the case f hiring tempary wkers and explains the benefits in terms of matching the wkfce s production levels to the likely demands of customers thereby improving flexibility and productivity and overall wkfce perfmance would represent good analysis. Reasonable analysis is shown through less developed chains of argument those with a less clear focus on the question. F example, in question 2(c), the offering of trade credit delays cash inflows to the business weakening its cash flow position. Simple points ideas expressed without any development would be rewarded with knowledge marks. EVALUATION The driving fce behind the award of evaluation marks is the quality of evaluation included in the answer and not the Quality of Written Communication. The key is the extent of the suppt f a judgement. Evaluative comments may be offered throughout a response and may suppt a judgement fully. The decision on the Quality of Written Communication should be used to adjust a mark within the level selected on the basis of the candidate s evaluation. F example, a candidate may have been awarded the lower mark in E2 f evaluation but the response may be particularly well structured with highly effective use of technical terms. In this case, the mark may be adjusted upward to the maximum f E2. A well written answer without any evaluation can receive one mark f quality of language. 4
1 Total f this question: 40 marks 1 (a) (i) Calculate Divine Chocolate Ltd s net profit margin f 2008 only. (3 marks) Crect answer: 4.60% (3 marks) Profit margin = Net profit Sales revenue x 100 (1 mark) OR Divine Chocolate Ltd = 0.57m 12.38m (1 mark) x 100 = 4.60 (1 mark) % (1 mark) Award one mark f assembling crect figures, one mark f a crect numerical answer and the final mark f expressing the answer as a percentage. Alternative answers: 4.6 4.60 2 marks 0.046% 2 marks 0.046 1 mark 6.36% (the 2007 figure) 1 mark. 5
1 (b) Analyse two influences on Divine Chocolate Ltd s pricing decisions. (8 marks) Level Descript Marks AO L5 Good application AND Good analysis 8 L4 L3 L2 Good application AND Reasonable analysis Good analysis AND Reasonable application Reasonable application AND Reasonable analysis Good application Good analysis Knowledge AND Reasonable application Knowledge AND Reasonable analysis 7 6 5 4 3 AO1/ AO2/ AO3 L1 Knowledge 2 1 AO1 Possible themes f application: the company is paying a premium price f cocoa bean supplies price elasticity of demand f chocolate bars is estimated to be 0.3 (price inelastic) the pricing decisions of maj rivals such as Cadbury Divine Chocolate Ltd s non-profit making philosophy the company has opted to sell its products in the mass market Fairtrade sales are rising me quickly than non-fairtrade sales. One way f candidates to achieve good application is to place all arguments within a response firmly in the context of the case study. Possible lines of analysis: There are many chains of argument that may be used. Some examples are: the way(s) in which the company s costs of production and/ its profits/profitability shape pricing decisions how pricing decisions may assist a business in achieving its objectives how the nature of the market and/ competits actions influence pricing decisions how the type of product and its price elasticity figure might influence prices and sales how marketing issues such as the product life cycle influence these decisions. F good analysis on this question, candidates should develop one me arguments (such as the above) fully showing how they may determine the company s approach to pricing. 6
1 (c) Has Divine Chocolate Ltd made the right decision to use Kuapa Kokoo as its maj supplier of cocoa beans? Justify your decision. (13 marks) Level Descript Marks AO L5 Good application AND Good analysis 9 8 L4 L3 L2 Good application AND Reasonable analysis Good analysis AND Reasonable application Reasonable application AND Reasonable analysis Good application Good analysis Knowledge AND Reasonable application Knowledge AND Reasonable analysis 7 6 5 4 3 AO1/ AO2/ AO3 L1 Knowledge 2 1 AO1 Possible themes f application: Kuapa Kokoo comprises 45 000 small farmers based only in Ghana Kuapa Kokoo owns 45% of Divine Chocolate Ltd Kuapa Kokoo has grown steadily along with Divine Chocolate Ltd s sales Kuapa Kokoo has received financial suppt from Body Shop International and Comic Relief generating positive publicity Divine Chocolate Ltd pays a 10% price premium f its cocoa beans from Kuapa Kokoo. Possible lines of analysis There are many chains of argument that may be used. Some examples are: whether not the supplier is reliable and able to guarantee supplies of the right quality at the right time how using this supplier might affect the company s profitability and/ its achievement of other objectives whether not using this supplier helps the company to compete with its rivals in the market in terms of prices and/ non-price facts whether the supplier will offer trade credit to the customer aiding its cash flow position. F good analysis on this question, candidates should develop one me arguments (such as the above) fully in suppt of the decision opposing it. 7
Ideas f Evaluation might include the following: it depends on the company s objectives. Profits are not as imptant here as increasing living standards in Ghana Divine Chocolate Ltd is targeting the USA (a huge market) and is obviously confident of its suppliers the company s suppliers have a maj say in decisions helping to avoid any supply problems and carrying out any changes me smoothly. F Evaluation, you should award marks using the grid below. Note: Evaluation also assesses candidates quality of written communication. When deciding on the level to be awarded, consider the degree to which the candidate offers his/her ideas. Level Descript Marks AO E3 Judgement with good justification. Answer has a logical structure throughout with effective use of technical terms. 4 E2 Judgement with reasonable justification. Evidence of a logical structure and some use of technical terms. 3 2 AO4 E1 Assertion judgement which is unsuppted. Limited evidence of a logical structure and little use of technical terms. 1 8
1 (d) Has Divine Chocolate Ltd become a me competitive company over time? Justify your view. (13 marks) Level Descript Marks AO L5 Good application AND Good analysis 9 8 L4 L3 L2 Good application AND Reasonable analysis Good analysis AND Reasonable application Reasonable application AND Reasonable analysis Good application Good analysis Knowledge AND Reasonable application Knowledge AND Reasonable analysis 7 6 5 4 3 AO1/ AO2/ AO3 L1 Knowledge 2 1 AO1 Relevant answers may include the following: a competitive business is one that is able to operate successfully in its market. Possible themes f application: Divine Chocolate Ltd s sales have risen by an annual average of 20% since 1998 Divine Chocolate Ltd s sales only increased by 15.7% between 2007 and 2008 (relevant calculation here) Fairtrade sales have risen recently by 12% in 2009 Divine Chocolate Ltd has expanded into the USA successfully Divine Chocolate Ltd sells its products at a similar price to those of Cadbury 81 pence and 82 pence The company s sales are only 0.34% of the market f chocolate in the UK (relevant calculation here) Divine Chocolate Ltd s sales were higher in 2008 than 2007 but its profit margin fell from 6.36% to 4.6% (relevant calculation here) Cadbury plc s profits are much higher and its 2008 profit margin was 12.04% (relevant calculation here). One way that candidates can achieve good application is to complete relevant calculations such as those above. 9
Possible lines of analysis There are many chains of argument that may be used. Some examples are: that competitiveness can be measured using profits profitability (profit margins, f example) over time and in comparison with other businesses sales figures, including rates of growth of sales and market share, provide evidence of a business s competitiveness competitiveness can arise from having a differentiated product from undercutting rivals prices a company can gain a competitive advantage if its products become popular fashionable. F good analysis on this question, candidates should develop one me arguments (such as the above) fully showing how they have affected the company s competitiveness over time. Ideas f Evaluation might include the following: Divine Chocolate Ltd s target was growth it is achieving this suggesting that it is competitive Divine Chocolate Ltd s rivals are copying its USP and this may reduce its competitiveness in the future it is competitive in terms of price and could be argued to offer greater value to customers. F Evaluation, you should award marks using the grid below. Note: Evaluation also assesses candidates quality of written communication. When deciding on the level to be awarded, consider the degree to which the candidate offers his/her ideas. Level Descript Marks AO E3 Judgement with good justification. Answer has a logical structure throughout with effective use of technical terms. 4 E2 Judgement with reasonable justification. Evidence of a logical structure and some use of technical terms. 3 2 AO4 E1 Assertion judgement which is unsuppted. Limited evidence of a logical structure and little use of technical terms. 1 10
2 Total f this question: 40 marks 2 (a) Analyse two possible reasons why Rob places great imptance on supplying high-quality products. (7 marks) Level Descript Marks AO L5 Good application AND Good analysis 7 L4 L3 L2 Good application AND Reasonable analysis Good analysis AND Reasonable application Reasonable application AND Reasonable analysis Good application Good analysis Knowledge AND Reasonable application Knowledge AND Reasonable analysis 6 5 4 3 AO1/ AO2/ AO3 L1 Knowledge 2 1 AO1 Relevant answers might include the following: a quality product is one that meets customer requirements. Possible themes f application: Eggcentric Ltd has loyal customers 60% of sales were to existing customers in 2010 Eggcentric Ltd spends little on marketing, it relies on wd-of-mouth and media publicity the company operates in a competitive market with larger rivals Eggcentric Ltd s cash position has become steadily weaker recently the company charges high prices. One way that candidates can achieve good application is to combine application themes such as those above. Possible lines of analysis There are many chains of argument that may be used. Some examples are: sales of products can depend upon their degree of differentiation and quality can provide this customer loyalty can generate substantial revenues (whilst helping to control marketing costs) satisfied customers can help to control costs by, f example, reducing re-wking costs quality products can be one way in which a company can increase its competitiveness. F good analysis on this question, candidates should develop one me arguments (such as the above) fully showing why quality is imptant. 11
2 (b) Analyse two likely consequences of Rob s decision to use delegation as a key part of managing the wkfce of Eggcentric Ltd. (7 marks) Level Descript Marks AO L5 Good application AND Good analysis 7 L4 L3 L2 Good application AND Reasonable analysis Good analysis AND Reasonable application Reasonable application AND Reasonable analysis Good application Good analysis Knowledge AND Reasonable application Or Knowledge AND Reasonable analysis 6 5 4 3 A01/ AO2/ AO3 L1 Knowledge 2 1 AO1 Relevant answers might include the following: delegation is the passing of authity down the ganisation structure. Possible themes f application: Rob is not a hands-on manager and wants to concentrate on new projects pay at Eggcentric Ltd is below that of similar businesses the business is growing quickly with many new staff Eggcentric Ltd has cash flow problems the company operates a flat ganisational structure. One way that candidates can achieve good application is to combine application themes such as those above. Possible lines of analysis: There are many chains of argument that may be used. Some examples are: delegation permits seni managers to spend me time on strategic tasks improving decision-making and perfmance delegation may motivate employees by, f example, enabling them to meet their esteem needs as identified by Maslow delegation can be me difficult to operate in certain circumstances, such as where there is a high labour turnover many new staff recruited, as training costs may be high training is essential to ensure juni employees have the necessary skills to carry out me complex and demanding tasks and can lead to maj cash outflows. 12
2 (c) Is the rapid growth of Eggcentric Ltd the maj cause of the company s cash flow problems? Justify your view. (13 marks) Level Descript Marks AO L5 Good application AND Good analysis 9 8 L4 L3 L2 Good application AND Reasonable analysis Good analysis AND Reasonable application Reasonable application AND Reasonable analysis Good application Good analysis Knowledge AND Reasonable application Knowledge AND Reasonable analysis 7 6 5 4 3 AO1/ AO2/ AO3 L1 Knowledge 2 1 AO1 Relevant answers might include the following: cash flow is the movement of cash into and out of a business over time. Possible themes f application: the business has grown very rapidly at an average rate of over 70% the business is very seasonal: 73% of sales occur between May and September Eggcentric Ltd has agreed to supply B&Q with substantial stocks on 60 days trade credit Rob is continually looking to develop new products such as beehives and training courses the company s bank appears unimpressed with Rob s cash flow fecasting and has asked f further detail. One way that candidates can achieve good application is to combine application themes such as those above. Possible lines of analysis: There are many chains of argument that may be used. Some examples are: overtrading is a significant cause of cash flow problems as cash outflows increase during periods of rapid growth and planning is essential to avoid this seasonality poses cash problems f businesses as products may have to be stockpiled in anticipation of busy trading periods meaning cash is tied up in stock (inventies) careful management and planning of future cash flows is imptant to highlight periods of predicted cash shtage and to take appropriate remedial actions agreeing to offer trade credit is, in effect, the granting of an interest-free loan f a period of time resulting in delayed cash inflows and lower cash balances. F good analysis on this question, candidates should develop one me arguments (such as the above) fully showing why rapid growth other facts have caused cash flow problems. 13
Ideas f Evaluation might include the following: really the cash flow problems are all tied up with growth. Facts such as seasonality and po planning simply add to this planning seems to be a key issue. Rob appears to be me interested in new ventures rather than managing his existing business. F Evaluation, you should award marks using the grid below. Note: Evaluation also assesses candidates quality of written communication. When deciding on the level to be awarded, consider the degree to which the candidate offers his/her ideas. Level Descript Marks AO E3 Judgement with good justification. Answer has a logical structure throughout with effective use of technical terms. 4 E2 Judgement with reasonable justification. Evidence of a logical structure and some use of technical terms. 3 2 AO4 E1 Assertion judgement which is unsuppted. Limited evidence of a logical structure and little use of technical terms. 1 14
2 (d) Rob believes that an effective recruitment and selection system is the essential fact to improve the future perfmance of his wkfce. Do you agree with him? Justify your view. (13 marks) Level Descript Marks AO L5 Good application AND Good analysis 8 L4 L3 L2 Good application AND Reasonable analysis Good analysis AND Reasonable application Reasonable application AND Reasonable analysis Good application Good analysis Knowledge AND Reasonable application Knowledge AND Reasonable analysis 7 6 5 4 3 AO1/ AO2/ AO3 L1 Knowledge 2 1 AO1 Relevant answers might include the following: recruitment and selection is the process of filling an ganisation s job vacancies by appointing new staff. Possible themes f application: the business has a high level of labour turnover (34%) the company s wkfce is growing rapidly (from 20 to 38 in 2010) Eggcentric Ltd is moving into new areas such as training courses f chicken-keepers Rob has implemented a policy of delegation labour productivity fell by 5.3% in 2010 the business s sales are strongly seasonal almost all the wkfce (93%) is full time Eggcentric s pay rates are only 91% of those paid at similar businesses. One way that candidates can achieve good application is to combine application themes such as those above. Possible lines of analysis: There are many chains of argument that may be used. Some examples are: recruiting the right people is vital to maintain the quality of a company s products and especially when the company is growing rapidly. Employees with the right skills can help to improve productivity and quality levels improving the company s perfmance training is one way of improving the skills of a wkfce to improve productivity levels and to enhance the profitability of the enterprise. Similarly, training would be essential f a quality assurance system employing tempary wkers can assist a company in managing seasonal demand f its products. Additional employees can be employed at busy times allowing increased production levels and minimising waiting times f customers 15
writers, such as Tayl, advocate the use of pay to improve motivation and the perfmance of the wkfce. Higher pay rates may result in higher rates of productivity. F good analysis on this question, candidates should develop one me arguments (such as the above) fully showing why the fact under discussion may improve the future perfmance of the wkfce. Ideas f Evaluation might include the following: it is unlikely that there is one essential fact to improve the wkfce s perfmance instead it is likely to be a combination of facts such as training and recruitment and selection it depends how the perfmance of the wkfce is to be measured: labour productivity turnover. F Evaluation, you should award marks using the grid below. Note: Evaluation also assesses candidates quality of written communication. When deciding on the level to be awarded, consider the degree to which the candidate offers his/her ideas. Level Descript Marks AO E3 Judgement with good justification. Answer has a logical structure throughout with effective use of technical terms. 5 4 E2 Judgement with reasonable justification. Evidence of a logical structure and some use of technical terms. 3 2 AO4 E1 Assertion judgement which is unsuppted. Limited evidence of a logical structure and little use of technical terms. 1 UMS conversion calculat www.aqa.g.uk/umsconversion 16